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WCLawyer, Attorney
Category: South Africa Law
Satisfied Customers: 15603
Experience:  L.LB (UOVS)
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I have a hair salon business which I pay monthly levies to

Customer Question

I have a hair salon business which I pay monthly levies to the Hairdressing Cosmetology Services Bargaining Council.My account is in arrears mainly due to a penalty being imposed of 10% each month on the monthly arrear amount comprising virtually all penalties.
Is there a cap on penalties (maximum) as the NCA claim a 2% penalty maximum can be levied whereas if a transaction falls outside the NCA then a maximum of 15.5% interest may be levied.
The HCSBC claim they charge penalties based on clause 22 of their collective agreement which is 10% which is more onerous than SARS penalties.
Please advise as I being charged a penalty of about R3500 every month.
Submitted: 1 year ago.
Category: South Africa Law
Expert:  WCLawyer replied 1 year ago.
Good day and thank you for your question. My name is ***** ***** I will try and assist you today.
The National Credit Act only applies to credit transactions, which this is not. Also, in terms of the NCA, that 2% is 2% per month.
The 15,5% interest (it is actually 9% now) relates to debt that is owed by one person to another where there was no agreement as to the interest. This is in terms of the Prescribed Rate of Interest Act. So, this is also not applicable.
The 10% is, in fact, a penalty and does not fall within the ambit of any of the above pieces of legislation. It does, however, have to comply with the Conventional Penalties Act, which basically state that a penalty clause in an agreement (which this is), must not be more onerous than is needed to remedy the potential damages that is being suffered.
The problem is that you are only going to be able to make those arguments at a court and the costs of that is going to be a lot more than R 3 500 per month.
What I suggest you do is to inform them that you are going to have to potentially close your doors if they continue to levy the penalty and whether they will consider writing off the penalty interest.
If they refuse, unfortunately, you are back to square one. You can then decide to not pay them the interest and only the arrears. They will then take you to the relevant court, where you can defend on the basis that the penalties are unnecessary onerous.
I know that this is probably not the answer that you have hoped for, however, I hope that you can still get some value out of it. I try my best to provide you with a legally sound and accurate answer and however much it pains me, it is not always good news. Trust me when I say that I wish I could provide you with a more optimistic answer. If you have follow up questions before you rate, feel free to ask them at no extra cost. If you are satisfied with the service, kindly rate it positively

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